Vir­gin At­lantic files for bank­ruptcy pro­tec­tion

USA TODAY US Edition - - NEWS | TRAVEL - Su­san Haas

NEW YORK – Vir­gin At­lantic, the air­line founded by Bri­tish busi­ness­man Richard Bran­son, filed Tues­day for pro­tec­tion in U.S. bank­ruptcy court as it tries to sur­vive the coro­n­avirus pan­demic that is ham­mer­ing the air­line in­dus­try.

The air­line made the Chap­ter 15 fil­ing in U.S. fed­eral bank­ruptcy court in New York after a pro­ceed­ing in the United King­dom.

A spokes­woman for Vir­gin At­lantic said the bank­ruptcy fil­ing is part of a court process in the United King­dom to carry out a re­struc­tur­ing plan that the air­line an­nounced last month. The process is sup­ported by a ma­jor­ity of the air­line’s

cred­i­tors, and the com­pany hopes to emerge from the process in Septem­ber, she said.

A Vir­gin At­lantic lawyer said in a court fil­ing that the com­pany needs an order from a U.S. court to make terms of the re­struc­tur­ing ap­ply in the U.S.

The air­line is pri­mar­ily a long-haul op­er­a­tor, in­clud­ing flights be­tween the U.K. and the U.S. It stopped fly­ing in April be­cause of the pan­demic and re­sumed flights only in July. It closed a base at Lon­don’s Gatwick Air­port and cut about 3,500 jobs.

Bran­son ap­pealed to the Bri­tish govern­ment for fi­nan­cial help ear­lier this year – even say­ing that he would pledge his Caribbean is­land re­sort as col­lat­eral for a loan – but was re­buffed.

Last month, Vir­gin At­lantic an­nounced it had put to­gether a deal to raise 1.2 bil­lion pounds (nearly $1.6 bil­lion at cur­rent ex­change rates) from pri­vate sources, in­clud­ing 200 mil­lion pounds from Bran­son’s Vir­gin Group.

At­lanta-based Delta Air Lines, which owns 49% of the air­line, agreed to de­fer pay­ments it was owed, and hedge fund David­son Kemp­ner agreed to lend Vir­gin At­lantic 170 mil­lion pounds. Vir­gin At­lantic also de­layed de­liv­er­ies of Air­bus jets.

Vir­gin At­lantic’s court moves fol­low bank­ruptcy fil­ings in the U.S. by Latin Amer­ica’s two big­gest air­lines, Latam and Avianca, and by Mex­ico’s Aeromex­ico since the start of the pan­demic. Vir­gin’s sis­ter air­line Vir­gin Aus­tralia filed for pro­tec­tion from cred­i­tors in its home coun­try in April.

Air­lines have been slammed by the coro­n­avirus out­break that has led to travel re­stric­tions. The In­ter­na­tional Air Trans­port As­so­ci­a­tion, a trade group for global air­lines, es­ti­mates the in­dus­try will lose $84 bil­lion this year and rev­enue will drop by half from 2019 lev­els.

TRI­PAD­VI­SOR

A spokes­woman said Vir­gin At­lantic’s bank­ruptcy fil­ing is part of a re­struc­tur­ing plan.

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